Vietnam to step back and take relook at high-speed rail

Deputy Prime Minister Trinh Dinh Dung said Thursday the State Appraisal Council should "carefully consider the necessity of the project, its benefit to the country in terms of economy, politics, culture, society, environment, security, and defense."

The high-speed rail, which would run 1,559 kilometers (970 miles) between Hanoi and Ho Chi Minh City, "is of large scale and would cost a lot and so should be carefully studied to make sure it will achieve general consensus," he was quoted as saying in a statement released by the Government Office.

The council should also assess the affordability of the project considering Vietnam also needs to invest in other major traffic projects from now until 2030.

The Ministry of Transport has been tasked with collecting opinions from experts, scientists, organizations and the public, and study the experience of other countries that have built or plans for high-speed rail.

Dung said the project involves sophisticated technologies, runs through as many as 20 cities and provinces and has large land requirements and thus involves large sums for compensation.

The ministry has worked with consultants, experts and scientists for the pre-feasibility study, but there are still disagreements on investment plan.

According to the latest draft of the project plan, construction on the high-speed rail route will start in 2024, a training academy will be established in 2026, test runs will start in 2028, and the official launch will be in 2030.

The construction might be in two phases, with two of the three sections of the route, from Hanoi to Vinh on the north-central coast and from Ho Chi Minh City to Nha Trang on the south-central coast being completed in the first phase in 2020-30.

Sixty percent of the tracks will be on viaducts, 10 percent underground and 30 percent on the surface, completely protected by fencing and without a single crossing.

The report is scheduled to be presented for approval to the National Assembly next October.

Experts said at a forum last November that they fear Vietnam can’t cope with the financial burden of the project.

High project costs and slow returns on investment make it difficult to attract investment, and since public debt is already very high, using state funds could break the proverbial bank, they said.

The consortium of consultants tasked with carrying out the pre-feasibility study, comprising three Vietnamese construction firms TEDI, TRICC and TEDISOUTH, said the project would cost $58.71 billion.

Deputy Minister of Transport Nguyen Ngoc Dong said on top of that the railroad would need funds to operate for the first 10 years.

No local investor is capable of covering the cost while foreign investors are reluctant as it would take a long time to make a return on their investment, he told the forum.

China and other European countries already have the technology to build high-speed railways as well as professional construction companies with well-trained workers while Vietnam has just started the process of researching and training people, he said.

The nation's existing 3,000-kilometer railroad network has not received any major investment since it was built 140 years ago, and does not have the capacity for high speeds.

Investment in railways currently accounts for just 1 percent of the transport sector’s total budget.